Hello, everyone. My friend has his PPOR and one IP. He'd like to buy more IP(s). However, ability of servicing more loan becomes a bottle neck. I was suggesting him to moving out from his PPOR and rent it out (since he only owes $180K on a $380K house, this PPOR will turn into a cf+ IP. This will help him to get more loans. And according to the 6 yrs rule, he’ll still be able to claim this house as his PPOR later on).
However, he needs to rent somewhere to live. Is that possible for him to rent his own IP and still treating the property as an IP (rather than PPOR) for tax purpose?? (providing he'll pay a market rate - as much as his current tenant pay)? Is there any tax law obligation involved here??
The reason for such a thought is that his current tenant is not-so-good, and he has borrowed about 105% on his IP, if he can rent it and lives there, he’ll be able to look after the property while still entitle to the tax benefit on this negative geared IP.
Any feedbacks are appreciated!! (So much to learn here!! Really enjoyed it!!)
However, he needs to rent somewhere to live. Is that possible for him to rent his own IP and still treating the property as an IP (rather than PPOR) for tax purpose?? (providing he'll pay a market rate - as much as his current tenant pay)? Is there any tax law obligation involved here??
The reason for such a thought is that his current tenant is not-so-good, and he has borrowed about 105% on his IP, if he can rent it and lives there, he’ll be able to look after the property while still entitle to the tax benefit on this negative geared IP.
Any feedbacks are appreciated!! (So much to learn here!! Really enjoyed it!!)